Originally Posted by
crazyjaydawg
If we ever got DC to touch 20% then maybe it becomes even less of an issue because likely fewer would get excess, but it all depends on future pay rate growth vs. IRS 415(c) limits which are tied to inflation.
Originally Posted by
Gunfighter
Can you explain how that would reduce the number of pilots getting 401k Excess? My understand is the earning limit generates excess until the DC exceeds 20%, then it becomes the contribution limit that triggers excess.
Originally Posted by
First Break
Fewer people get excess with a higher contribution? You’re going to have to show some math on that one.
TBH, I'm not entirely sure what I was trying to say when I said the bolded; I was sitting in the middle seat on a 4 hour long deadhead and just jamming away on my phone (thanks delayed implementation).
I think I was articulating that going off of 16% DC, when pilots hit the income limit ($330,000) then they're getting spill money unnecessarily, with 4% of $330k being about $13k I was thinking along the lines of $13k that should be in a 401(k) and not in spill/MBCBP.
I articulated my thought poorly and as it was written is just wrong. Sorry about that.
Originally Posted by
First Break
You keep saying that the black rock fund doesn’t beat inflation, but a simple web exercise completely disproves that. The 10 year return is substantially ahead of inflation.
The total inflation over the last 10 years is 30.2%, LIRKX has a total return of 43.5% over that span. For reference, the S&P 500 total return is about 160% over the same time frame. So yes, LIRKX beats inflation, but not by much. Honestly over 10 years that's just about a rounding error.
Originally Posted by
First Break
ESG nonsense notwithstanding (we are likely on the same page, I’ll leave it at that), the ALPA comm said that the plan assets would initially be placed in that fund. My guess, having dealt with professional management of a very large trust in another life, is that there has to be some time for assets to accumulate before professional active management makes sense. The expense ratio of the Blackrock fund is pretty modest, and of the available funds that meet the requirement for the 40/60 ratio, it actually looks like one of the more efficient ones. That said, there doesn’t seem to be anything forcing that fund to hold the assets forever, and the way ALPA worded it makes me think it will be temporary. And FWIW, the Company signing all our paychecks has gone ESG hog wild too. I’m not sure why that would influence your decision to participate in the plan, but you do you.
When I go back and re-read this thread, two themes stick out for people who believe they are better off outside the plan. (1) They want to spend the cash now, or (2) They don’t think the MBCBP returns will be adequate to overcome the opportunity cost of missing out on taxable higher returns outside the plan.
What I’m trying to further understand about the guys in the (2) camp, is are you truly looking for max returns with all your investable assets? Do you really have no cash/money market/low risk assets in your portfolio, ever?
I’d genuinely like to know if you guys are really putting every penny you have in higher risk/return investments.
Regarding ESG; it's not the political side of it that bugs me, it's the lack of financial responsibility. It is BlackRock now being able to say that they will invest their clients' (potentially yours and mine) money into stocks and businesses that score high enough on their ESG metrics regardless of their financial performance. And so far, they're using the ESG schtick as cover for underperforming funds. I don't always agree with Delta's ESG stand, however they believe that it directly contributes to the bottom line and that they're able to monetize it, if so then be it. I don't like the idea that a fund manager can
cost me money in the name of ESG. If ESG makes money, then great, let it stand on it's own merits. I'm not going to finance it with my retirement dollars.
For the comment regarding the (2) camp; yes I am trying to maximize my returns while I am at a young age. Right now I have lots of doors that I'm trying to open/keep open so that as I get into my 50s and later, I will have options. I don't want to rely solely on Delta for a paycheck until retirement, I don't want to rely solely on the market conditions and I don't want to rely solely on my real estate. I think that Delta is my most conservative source of income right now, followed by real estate and eventually DoD pension. My equities are the riskiest part of my income portfolio now and into the future. I believe that I have some pretty good back ups that allow me to be riskier at this point in my life. Certainly I will tamp down the risk as I get older, but right now I have nothing but time on my side.